Dave Ramsey Has 2 Reasons Why You Should Claim Social Security at 62. They’re Both Wrong

• Research shows that 90 percent of current workers would receive more lifetime Social Security income if they waited until age 70 to receive benefits.

• Taking permanent benefits early reduces a spouse’s survivor benefit if the higher earner dies first.

• Deferring Social Security until age 70 guarantees a monthly benefit increase rather than an uncertain return on investment.

• A recent study found that there’s one habit that can double Americans’ retirement savings and take retirement from a dream to a reality. Read more here.

When you turn 62, you become eligible to receive Social Security benefits. Most financial experts strongly recommend waiting to start getting your checks, although you can apply for benefits sooner. However, financial expert Dave Ramsey takes a different stance.

The Ramsey Solutions blog lists two specific reasons why you should collect benefits at age 62. Unfortunately, both of these reasons are wrong. Listed below are two reasons, along with some details on why these two problems are so serious.

Ramsey said the first important reason to claim Social Security benefits early is that you should try to grab the money while you’re still alive.

The Ramsay Solutions blog writes: “In most cases, it makes more sense to claim your pension earlier than later. Why? Because your pension disappears when you die… so you might as well take the money while you can and make the most of it.”

The first big problem with this advice is that it’s wrong. When Social Security was created, a system of early filing penalties and late retirement credits was included to ensure that you could file at any age and still receive the same benefits as someone who filed earlier or later. However, life expectancy has changed since the system was implemented, and research now shows that as many as 90 percent of current workers will end up with more lifetime Social Security income if they wait until age 70.

So, while Ramsay says to get your money before you die, chances are you accustomed to If you die before you break even due to a delay in starting benefits, you could end up with hundreds of thousands of dollars in additional discretionary income if you delay filing.

The second big problem with this advice is that it may end up putting your spouse in a difficult position.

If you are the higher earner and you die first, your spouse will receive survivor benefits. Unfortunately, if you file early, you will reduce these benefits, leaving your spouse with significantly less benefits than if you had waited. If you die first and you made more money while you were working, you want to maximize the amount of money your widow or widower receives, otherwise they may be left in financial difficulty when you pass away.

Ramsey’s second argument for claiming early is that you can get your money and start investing it. This may be a worse reason to claim benefits at age 62. There are many problems with this suggestion.

First, you need money to make ends meet. If you’re under full retirement age, there’s a limit to the amount you can work while collecting Social Security, so if you file for benefits and try to invest your money, where are you supposed to get the money to pay your bills? Of course, you could theoretically live off a portion of your investments while requiring Social Security to invest the amount you receive in benefits—but that doesn’t seem to make sense, investing your benefits since you’re withdrawing more money from your investments to pay the bills that benefits can pay.

Second, investing large amounts of money in retirement is generally considered quite risky. Most people start moving some of their portfolios out of stocks, but Ramsey recommends that you claim Social Security and use the money to invest for high returns—ignoring the fact that if the market drops and you don’t have time to wait for a recovery, you’ll lock in losses because you’ll have to sell those investments to earn income to stay afloat.

Third, if you delay filing for Social Security, each month you wait until age 70 will increase your monthly benefit. This is a guaranteed increase. So you walk away from a sure investment and just hope for the best.

Neither of these arguments is a good reason to start collecting Social Security at age 62. You shouldn’t listen to Ramsey’s advice and wait as long as possible to start collecting Social Security to give yourself the best chance of giving yourself the retirement security you deserve.

Most Americans vastly underestimate how far they will need to retire and overestimate how ready they are. But data shows that people who have a habit will have more than double Savings for those who don’t.

No, it has nothing to do with increasing your income, saving, cutting coupons, or even reducing your lifestyle. It’s simpler (and more powerful) than any of them. Frankly, it’s shocking that more and more people aren’t adopting this habit, considering how easy it is.